On the financial management concept of "cash is the king"Author(s): Tongfeng Chen, Wang Chang, Hu Fagang
At present, many Chinese enterprises lack well understanding on cash flow. They still attach great importance on profitswhile ignoring cash flow. However, a number of enterpriseswent bankrupt during this financial crisis. The direct trigger for bankrupt was enterpriseÂ funds tension, which made cash flow couldnÂt turnover smoothly. Therefore, cash flow is extremely important for enterprise. This paper analyzes the status of cash flow in enterpriseÂs financial management, and compares it with enterpriseÂs accounting profits. It is pointed out that cash flowismore importance than profits in economic activities. It determines enterpriseÂs value. It is proved again that, the financial management concept of Âcash is he kingÂ is a magic weapon which enables enterprises to successfully get through the financial crisis.